Posts tagged 'Bond Vigilantes'

This is not 1994

Dario Perkins at Lombard Street Research has a great little note out on Tuesday arguing why it’s absolutely wrong to assume the current bond sell-off is in any shape or form a repeat of 1994.

As he notes (our emphasis): Read more

Fiscal credibility vs democracy

Last November John Hempton wrote an amusing post arguing that Ben Bernanke’s problem was that the Fed’s credibility was too high, thus creating a liquidity trap, and to solve this Bernanke should do something crazy like appear on television wearing a Hawaiian shirt and smoking a spliff.

John Kay’s latest FT column looks at the problem of credibility, although more in a fiscal than a monetary context. As he points out, we frequently hear now that credibility is the problem besetting heavily-indebted governments. Credibility is seen as a kind of panacea but Kay points out it’s only a very recent concept in economics: not in Keynes, not in Smith, not in Marshall. It dates back to a 1979 article by Finn Kydland and Edward Prescott, he says, who won a Nobel economics award for their work on the subject. Read more

Eurozone wars, or vigilante vs vigilante

Bond vigilantes — per James Carville — are intimidating things.

And no more so than in Europe. Rising bond yields in the region have managed to force austerity onto places like Greece, and are currently testing political will in Italy. Read more

Rub-a-dub-dub in a $21bn Treasuries tub

Investors sloshed and splashed in a $21bn bloodbath on Wednesday.

An auction of $21bn worth of US Treasuries at 3.34 per cent was the highest bid since May, and well past the 2.64 per cent yield at last month’s auction. Read more

More gilt-free bloodshed

Here’s a bit more on why the UK government’s massive spending review has had, and will likely have, less than a massive influence on the market for its bonds.

In fact — the government is detailing its cuts amid gilt yields that have rarely been lower in post-war history. Read more